2/22/2012 @ 6:00PM

Jeff Joerres On the Skills Gap

Last month President Obama vowed to spend $8 billion to help junior colleges train students for high-growth jobs. Obama is right about the need (though wrong about federal intervention). Even amidst the rotten unemployment rate–8.3% officially, 15% taking the discouraged long-term unemployed into account–many good jobs go begging today.

I recently talked about the skills gap with Jeff Joerres, CEO of Milwaukee-based ManpowerGroup. Readers might be surprised to know that ManpowerGroup now generates $22 billion in ­annual sales and operates in 80 countries. Joerres, CEO since 1999, is a ­favorite of Wall Street analysts because of his straight talk.

The skills gap exists not just in Silicon Valley, where jobs demand math SAT scores of 800 and an 80-hour workweek. Even now some high-level blue-collar jobs are easy to get if one has the right skills. In the U.S. there is a shortage of electricians, plumbers and medical technicians. Oilfield laborers in North Dakotas Bakken reserve are pulling down $80,000 a year and more; the same is true in Australias copper mines. China has a massive shortage of CPA-level accountants.

This skills gap is sure to grow as the population ages and industries from health care to manufacturing are altered by technology. Outsourcing to China wont be the answer, either. Its population is aging the fastest of all the major economies.

Today we speak of a jobless ­recovery, but we also heard that 10 and 20 years ago. This recession was more global, much bigger and caused a lot more financial fright than those that went before. Companies today want to see demand before they hire people; previously they hired in anticipation, based on economic forecasts. There used to be a rhythm to downturns.

Why do companies think they can hire after demand picks up? Wont that leave them behind the curve? This is really interesting. Companies now have become better at seeing the future than most economists. They see changes in their supply chains instantly. And, thanks to the likes of
SAP
, Oracle and
IBM
, companies have become immensely sophisticated at managing just-in-time inventories, as well as the supply of talent.

The new phrase seems to be talent supply chain. Exactly. That chains become very sophisticated and global.

You dont hear the word outsourcing much anymore. Why not? Companies now have multiple footprints around the world. Their choices are very different. If it makes sense for them to have a footprint in Beijing, Bangalore or Silicon Valley, thats where theyll go.

Do you buy the idea that 8% unemployment is the new normal in the U.S.? It would be easy to conclude that. But Ill say no. I think it can be lower than that, but getting below 6% will be very difficult.

Because of the skills mismatch. Yes–thats the phrase we came up with at ManpowerGroup six years ago. We saw data in 2006 showing that companies were evolving their specific needs faster than people were evolving their specific skills.

And that was before the recession. The mismatch, or gap, has grown since then. Yes, because most companies dont have raw demand pushing them toward growth. They achieve growth through productivity and efficiency. Every job has to be productive and efficient. Companies are therefore highly selective in adding jobs. They know exactly what they need and when they need it. That sophistication isnt going to go away.

Fifteen percent of parking lot attendants have B.A. degrees. Would more students be better off going to a trade school? Clearly. This trend started in the 1970s–and for the right reasons: The knowledge economy will need knowledge workers. But the knowledge economy was defined too narrowly. It was defined as a service industry. We failed to see that manufacturing would also be part of the knowledge economy. In many ways manufacturing has a bad name. Parents want to send their kid to a college, not a trade school. That the kid might end up waiting tables with his history degree is, weirdly, considered a better result than if the kid had gone to a technical school and become a master plumber. Even though the plumber will earn four times as much as the waiter.

How do you break the prejudice against trade schools? We have to bring honor to the trades, to technical schools. We have to do that with messaging and proof points, and we have to realize that it will take years to change hearts and minds. It took years to convince people that everyone should go to a four-year college, so itll take years to undo that thinking. But if we never start, well never get out of the quagmire.